Early release of superannuation benefits · associated with a dependant’s death, funeral or...
Transcript of Early release of superannuation benefits · associated with a dependant’s death, funeral or...
Early release of superannuation benefits
Under compassionate and financial hardship grounds and for victims
of crime compensation
December 2017
© Commonwealth of Australia 2017
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CONTENTS
CONSULTATION PROCESS ............................................................................................................ IV
MINISTER’S FOREWORD ............................................................................................................... V
PRINCIPLES UNDERPINNING EARLY RELEASE ................................................................................ VI
PART 1: EARLY RELEASE ON COMPASSIONATE GROUNDS ...............................................................1
Background ......................................................................................................................................... 1
Data on benefits released on compassionate grounds ....................................................................... 2
Discussion against the principles ........................................................................................................ 4
PART 2: EARLY RELEASE ON THE GROUNDS OF SEVERE FINANCIAL HARDSHIP ............................... 13
Data on benefits released on the severe financial hardship grounds ..............................................14
Discussion against the principles ......................................................................................................15
PART 3: VICTIMS OF CRIME COMPENSATION ............................................................................... 17
Introduction ......................................................................................................................................17
How do victims get compensation now? ..........................................................................................18
Bankruptcy ........................................................................................................................................19
Issues .................................................................................................................................................19
APPENDIX A: CONSOLIDATED LIST OF QUESTIONS ........................................................................ 25
APPENDIX B: STATE AND TERRITORY STATE-FUNDED COMPENSATION REGIMES .......................... 29
APPENDIX C: TERMS OF REFERENCE OF THE REVIEW .................................................................... 31
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CONSULTATION PROCESS
Request for feedback and comments Interested parties are invited to comment on this consultation paper. While submissions may be
lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please
submit responses sent via email in a Word or RTF format. An additional PDF version may also be
submitted.
All information (including name and address details) contained in submissions will be made available
to the public on the Treasury website unless you indicate that you would like all or part of your
submission to remain in confidence. Automatically generated confidentiality statements in emails are
not sufficient for this purpose. If you would like only part of your submission to remain confidential,
please provide this information clearly marked as such in a separate attachment.
Closing date for submissions: 12 February 2018
Email [email protected]
Mail Division Head
Retirement Income Policy Division
The Treasury
Langton Crescent
PARKES ACT 2600
Enquiries Enquiries can be directed to [email protected]
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MINISTER’S FOREWORD
The rules governing early release of superannuation benefits
have not changed substantially since 1997. The superannuation
system has come a long way since then and it is important to
ensure they remain fit for purpose.
Key issues that stakeholders have raised with me include:
• the rapid increase in the use of superannuation for medical
treatment;
• whether the mortgage foreclosure ground should be
extended to rental eviction;
• whether the current rules for release on grounds of severe financial hardship appropriately
balance the need for simplicity and consistency with fairness; and
• whether an offender’s superannuation should be available to pay compensation or restitution to
victims of crime.
This is why the Turnbull Government has asked Treasury to review the current rules governing early
release of superannuation on grounds of severe financial hardship and compassionate grounds.
This review will complement the work currently being undertaken by the Department of Health, in
consultation with the Treasury and the Department of Human Services, to understand better the
recent trends and practices in the early release of superannuation for medical purposes.
The review will also consider whether, and the circumstances in which, an offender’s superannuation
assets should be available to pay compensation or restitution to victims of crime.
Other existing grounds for early release of superannuation benefits, such as for terminal medical
conditions, incapacity, or departing Australia will not be considered as part of this review.
This review is one of a range of measures the Government is undertaking to ensure that the rules
governing the compulsory superannuation system serve the interests of consumers.
Submissions to the review are requested by 12 February 2018.
The review will make recommendations to Government in March 2018.
I look forward to working with stakeholders to ensure that the rules governing early release of
superannuation benefits remain fit for purpose.
Kelly O’Dwyer MP
Minister for Revenue and Financial Services
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PRINCIPLES UNDERPINNING EARLY RELEASE
The Government recognises there should be guiding principles to provide a framework for this
review, to assess whether the provisions for early release of superannuation benefits under
compassionate grounds and severe financial hardship are fit for purpose.
The principles will not always point in the same direction. Every ground of release reflects a trade-off
between members’ immediate needs and the long-term objective of building retirement income.
This will never be easy. However, highlighting these trade-offs is important when considering
whether the rules should be amended.
Below are three proposed guiding principles for this review.
• Preservation: Superannuation benefits should generally be preserved to provide income in
retirement to substitute or supplement the Age Pension. Early access to superannuation for
other purposes is inconsistent with the preservation principle.
• Genuine hardship: There will be circumstances where the benefits of early access to
superannuation for an individual will exceed the benefits of preserving balances until
retirement. The challenge for policy-makers is to identify the point at which the need for
compassion outweighs the broader policy objective of the superannuation system.
• Last resort: Early release of superannuation benefits should generally be a last resort where
other sources of financial support have been exhausted. It is not an appropriate replacement for
existing health and income support policies.
• Fair and effective: The rules should be able to be administered fairly and effectively; that is, the
rules should be sufficiently clear and objective to allow applications to be dealt with in a timely
and consistent fashion, and ensure that similar cases can be treated alike. Rules that are highly
subjective in nature will necessarily cause more red tape, expense and difficulty for applicants,
trustees and Government.
QUESTIONS
0.1. Do these proposed principles provide an appropriate guide to determine the nature and scope of the
rules for early release under compassionate and financial hardship grounds, and for victims of crime
compensation? If no, what should the principles be?
0.2. Having regard to these principles, should early release of superannuation benefits generally be
more or less difficult to obtain?
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PART 1: EARLY RELEASE ON COMPASSIONATE GROUNDS
Background Prior to 1997, there was no separate provision for early release of superannuation benefits on
compassionate grounds. In 1997, changes were made to the early release provisions to tighten the
eligibility criteria and clarify the circumstances covered by the conditions for release of benefits on
compassionate grounds in order to provide a more objective test. These changes were introduced by
the Superannuation Industry (Supervision) Regulations (Amendment) 1997 No 152.
Early release of superannuation benefits on compassionate grounds is currently governed by
Regulation 6.19A of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations).
This sets out the circumstances in which superannuation may be released upon compassionate
grounds and works in conjunction with Schedule 1 of those regulations, which sets out, for certain
grounds of release, the maximum amounts and permitted frequency of release. Equivalent
regulations are contained in Regulation 4.22A of the Retirement Savings Account Regulations 1997 in
respect of Retirement Savings Accounts (RSAs).
Benefits may be released on compassionate grounds to meet expenses in respect of the following
(for the applicant or the applicant’s dependant):
• medical treatment;
• medical transport;
• modifications necessary for the family home or motor vehicle due to severe disability; and
• palliative care.
Funds may also be released on compassionate grounds to prevent foreclosure of a mortgage or
exercise of a power of sale over the member’s principal place of residence; or to pay for expenses
associated with a dependant’s death, funeral or burial.
The regulations also allow funds to be released under grounds that are ‘consistent with’ one or more
of the above grounds, providing some degree of discretion to the Regulator to determine specific
grounds for release.
In all cases in which early release of superannuation is sought on compassionate grounds, the
applicant must satisfy the Regulator that they do not have the financial capacity to meet the relevant
expense (SIS Regulation 6.19A(2)(b)).
Early release of superannuation benefits
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Responsibility for administration of the early release of superannuation on compassionate grounds
has changed over time. It was initially the responsibility of the Insurance and Superannuation
Commission. It passed to the Australian Prudential Regulation Authority (APRA) when this body was
created from the Insurance and Superannuation Commission in 1998. It was then transferred to the
Department of Human Services (DHS) in 2011. The Government has recently announced that it will
transfer responsibility for administering early release on compassionate grounds from DHS to the
Australian Taxation Office. These new arrangements are expected to commence in 2018.
To obtain early release of superannuation benefits on compassionate grounds, individuals apply to
the Regulator and provide identity documents, quotes and unpaid invoices for the amount of funds
required, and the prescribed documentation specified in the regulations to prove the individual
needs the funds requested.
Individuals can apply under multiple grounds, although the documentation required is different for
each ground of release. For example, a person seeking early release for medical treatment must
provide written evidence from at least two medical practitioners – one of whom must be a specialist
– certifying that the treatment or medical transport:
• is necessary to treat a life threatening illness or injury; or alleviate acute or chronic pain; or
alleviate an acute or chronic mental disturbance; and
• is not readily available to the individual or their dependant through the public health system.
The Regulator determines the maximum amount of benefits to be released early, taking account of
the ground of release and the individual’s financial capacity. There are no financial limits for early
release of superannuation on compassionate grounds, except in the case of early release to prevent
foreclosure on a mortgage, where the amount must not exceed the sum of three months’
repayments and 12 months’ interest on the outstanding balance of the loan.
Currently, DHS sends a letter to an individual, generally within 28 days after application, notifying
them if they have been approved for early release on compassionate grounds or why their
application has been denied. If approved, the applicant must then approach their superannuation
fund trustee, who has ultimate discretion regarding the release of the funds.
Data on benefits released on compassionate grounds The total amount released early from the superannuation system under compassionate grounds has
increased markedly over time, from around $42 million in 2000-01 to around $290 million in
2016-17. This represents a small fraction of total superannuation assets – in 2016-17, just over
0.01 per cent of the total $2.5 trillion of assets held in the superannuation system were released on
compassionate grounds.
The two main categories for the approval of early release on compassionate grounds in 2016-17
were medical treatment and transport (comprising around 72 per cent of funds approved for
release), and mortgage payments (comprising around 18 per cent of total funds approved)
(Chart 1, overleaf).
Part 1: Early release on compassionate grounds
3
Over the past 17 years (since 2000-01), the amount of superannuation approved for early release on
medical grounds has increased the most rapidly. Release on medical grounds has increased by
around $205 million over the period since 2000-01, which is nearly a five-fold increase compared to
all other grounds of compassionate release, which have increased by around $43 million over the
same period. This rapid increase in benefits released on medical grounds has occurred from around
2010-11 onwards (Chart 2, overleaf).
The Department of Health is currently undertaking a consultation process, with support from
Treasury and DHS, to learn more about the early release of superannuation for medical purposes,
including the reasons for the increase in the number of applications and the amount released upon
medical grounds. The findings from this process will feed into this broader review of early release of
superannuation benefits.
Chart 1: Proportion of funds approved
for early release on
compassionate grounds,
2016-17
Chart 2: Amount approved for early
release on medical grounds and other
compassionate grounds,
2000-01 to 2016-17
Source: Department of Human Services.
A driver of the increase in funds released on medical grounds has been an increase in the number of
applications received and approved. The number of applications for early release on medical grounds
has increased around four-fold, from around 4,000 in 2010-11 to around 22,000 in 2016-17.
Applications approved on medical grounds have increased around five-fold since 2010-11, from
around 2,500 in 2010-11 to around 15,000 in 2016-17 (Chart 3). The number of applications received
or approved on other compassionate grounds has not experienced a similar increase.
It is important to note that some of the increase in the number of applications for early release on
compassionate grounds from 2015-16 onwards is likely to have resulted from a change in the way
applications are recorded by the Department of Human Services, following the introduction of a
new online claim process in July 2015.
Funeral Medical DisabilityMortgage Palliative
0
50
100
150
200
250
0
50
100
150
200
250
2000-01 2004-05 2008-09 2012-13 2016-17
$ million$ million
Amount approved - medical grounds
Amount approved - other grounds
Early release of superannuation benefits
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By contrast, the average amount of superannuation approved for early release per application on
medical grounds has not increased as significantly. It has risen from around $9,000 per medical
ground application in 2010-11 to around $14,000 in 2016-17 (not taking into account inflation)
(Chart 4, overleaf).
Chart 3: Number of applications received
and approved for early release on
medical grounds and other
compassionate grounds,
2000-01 to 2016-17
Chart 4: Average amount approved for
early release on medical
grounds and all
compassionate grounds,
2000-01 to 2016-17
Source: Department of Human Services.
Discussion against the principles This consultation paper seeks feedback on early release on all compassionate grounds – including the
appropriateness of the current grounds for release. Feedback from stakeholders and members of the
public, the number of applications received and the relative amount of funds released, generally
suggests that the two main areas of focus are medical and housing.
It can be argued that the rapid increase in the early release of superannuation on medical grounds
suggests the current rules are too lenient and that the wording of the current regulations is too
broad. Conversely, other stakeholders consider that the current rules are sufficient but that the
administration of the early release provisions could be tightened and the regulations read more
strictly.
Feedback we have received can be considered in the context of the principles outlined above. In
particular:
• the preservation principle – that such a rapid increase in the release of funds, as well as there
being no restriction on the number of times one can apply for early release on compassionate
grounds, is putting at risk the objective of superannuation to preserve superannuation benefits
to provide income in retirement;
• the last resort principle – that funds are being accessed for out-of-pocket expenses even though
some treatments and procedures are covered by the Medical Benefits Scheme (MBS) or private
health insurance; and
0
5
10
15
20
25
0
5
10
15
20
25
2000-01 2004-05 2008-09 2012-13 2016-17
Received - medical
Received - other
Approved - medical
Approved - other
Applications ('000s) Applications ('000s)
0
2
4
6
8
10
12
14
16
0
2
4
6
8
10
12
14
16
2000-01 2004-05 2008-09 2012-13 2016-17
$000$000
Average approved - medical
Average approved - total
Part 1: Early release on compassionate grounds
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• the genuine hardship principle – that funds are being accessed for some procedures that should
not be considered necessary to address genuine hardship.
By contrast, other stakeholders have suggested that the rules governing early release of
superannuation on housing grounds are too restrictive because they focus on owner occupiers rather
than renters; making it inconsistent with:
• the genuine hardship principle – renters who cannot make their rental payments may
experience as much hardship as property owners who cannot meet their mortgage payments;
and
• the fair and effective principle – renters and mortgagees should have equal access to their
superannuation benefits as they are in similar situations (that is, both might lose their home).
A contrasting view is that the current housing ground is appropriate as it is consistent with:
• the preservation principle – a mortgage is supporting eventual ownership of a long-term asset,
whereas renting does not, so it may be reasonable for superannuation benefits to be used to
preserve an asset that will add to overall retirement wealth.
Stakeholders are encouraged to consider whether these two grounds, as well as the other grounds
for compassionate release, should be modified (and whether they should be enlarged or narrowed)
through the lens of the proposed guiding principles outlined above.
Financial capacity
In all cases in which early release of superannuation is sought on compassionate grounds, the
individual must satisfy the Regulator that they do not have the financial capacity to meet the
relevant expense (SIS Regulation 6.19A(2)(b)).
Key issues
The current rules contain no further guidance about the meaning of ‘financial capacity’. This is in
contrast to the strict and objective definition of ‘severe financial hardship’ contained in SIS
Regulation 6.01 (see Part 2 of this paper).
An individual with significantly higher than average income may be able to demonstrate that they do
not have the financial capacity to meet an expense, even if this is a result of the individual’s poor
financial decisions/financial management. This is because an individual is not required to be in
financial hardship to show they do not have the financial capacity to meet a relevant expense.
QUESTION
1.1 Should the assessment of financial capacity be made more prescriptive and/or objective? If so,
how? What information might applicants need to provide?
Early release of superannuation benefits
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Medical treatment grounds
The current rules impose evidential requirements before the Regulator can be satisfied that money is
required for medical treatment or medical transport for the individual or the individual’s dependant.
Specifically, under SIS Regulation 6.19A(3), at least two medical practitioners – one of whom must be
a specialist – must certify that the treatment:
• is necessary to treat a life threatening illness or injury; or alleviate acute or chronic pain; or
alleviate an acute or chronic mental disturbance; and
• is not readily available to the individual or their dependant through the public health system.
Similar restrictions apply in respect of medical transport (SIS Regulation 6.19A(4)).
Further, release will only be available where the individual does not have the financial capacity to
meet the medical expense (SIS Regulation 6.19A(2)), as mentioned above.
Key issues
Increase in applications
As discussed earlier in this paper, there has been a rapid increase in the amount of superannuation
benefits released on medical grounds, which is mainly attributable to the rapid increase in the
number of applications received and approved.
Although a gradual increase in the amount of superannuation approved is to be expected as the
superannuation system matures and account balances grow, the rapid pace of the increase warrants
attention.
There may need to be additional limitations on the amount of superannuation released on medical
grounds. Conversely, if the release of superannuation on medical grounds provides a long-term
benefit to the individual and is used in cases of undue hardship as a last resort, this may justify the
early release of superannuation benefits.
QUESTIONS
1.2 What factors might be driving the increase in the amount of superannuation released on medical
grounds and are these factors any cause for concern?
1.3 Do the current provisions for early release on medical grounds strike the appropriate balance
between preserving income for retirement and providing assistance in times of genuine hardship?
If no, what are the alternatives?
1.4 Should there be a limit on the number of releases permitted within a certain timeframe
(for example, 12 months) and/or should there be cashing restrictions on the amount released? If so,
should there be different restrictions for different medical conditions?
Part 1: Early release on compassionate grounds
7
Treatments and costs that can be covered
A significant proportion of recent applications appear to relate to out-of-pocket expenses associated
with bariatric surgery (that is, weight loss surgery), with a smaller proportion attributable to assisted
reproductive treatment (ART), also referred to as in-vitro fertilisation (IVF) treatment.
In the period July to September 2016, around 56 per cent of approved medical ground applications
were for bariatric surgery (1,857 applications) and around 7 per cent were for ART (239 applications).
Most commonly, funds to pay for bariatric surgery are accessed on the basis that the surgery will
treat a life threatening illness, or alleviate acute or chronic pain. This clinical determination is made
by the treating surgeon.
Funds can also be accessed for treatments to alleviate chronic mental disturbance; and in these
situations a different assessment criterion is used. Examples in this category include a medical service
that could be considered an aesthetic improvement (such as breast augmentation), or ART. For these
services it is most commonly a psychiatrist who makes the determination that the treatment claimed
will alleviate the chronic mental disturbance.
There can be difficulties for the Regulator in determining whether the amount claimed for a
particular treatment is reasonable – even where it is accepted that the treatment is medically
necessary. For example, where a treatment is available in Australia but the patient chooses to
undertake the procedure overseas, the overall cost may be much greater owing to travel and
accommodation expenses. Similarly, where the applicant has sought the assistance of a third party
provider in organising a treating practitioner and lodging their application with the Regulator, there
may be cases where the cost of the treatment appears to be higher than normal.
QUESTIONS
1.5 Have you observed any trends in the types of treatments that are being funded by superannuation
benefits and are these trends any cause for concern?
1.6 Are there certain treatments for which early release of superannuation should not be permitted?
If so, what is the basis upon which these treatments should be excluded?
1.7 When might ART (IVF) be necessary to treat a life threatening illness or alleviate acute or chronic
pain or mental disturbance (in general – noting that this will depend upon the specific circumstances
of each case)?
1.8 When might bariatric surgery be genuinely necessary to treat a life threatening illness or alleviate
acute or chronic pain or mental disturbance (in general – noting that this will depend upon the
specific circumstances of each case)?
1.9 Should the rules explicitly require that the Regulator be satisfied that the amount claimed for a
particular treatment is ‘reasonable’? If so, what evidence might be relevant to that determination?
Dental treatment
Some stakeholders have noted that the current rules do not explicitly provide for early access to
superannuation in order to meet the costs associated with dental treatment (although some
applications are approved for dental treatment where the Regulator determines that such release is
‘consistent with’ the other grounds of release under SIS Regulation 6.19A(1)(f)).
Early release of superannuation benefits
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QUESTION
1.10 Should there be an additional category of early release in respect of dental treatment? If so, under
what circumstances should early release be available and should there be any limits or restrictions?
Severity of condition to be treated
The current test simply requires that the relevant medical procedure ‘alleviate’ acute or chronic pain
or mental disturbance (SIS Regulation 6.19A(3)(a)(ii) and (iii)). It is not necessary that the procedure
‘treat’ the pain or disturbance (in contrast to cases of life threatening illness or injury).
The term ‘alleviate’ directs attention to whether the treatment temporarily provides symptomatic
relief rather than to whether the treatment aims to heal or cure the individual’s condition.
Under this provision, individuals are not excluded from seeking early access to superannuation
because the particular illness from which they suffer can be alleviated but not cured. However, since
the regulations say nothing about the severity of the pain or distress or the extent to which a
particular treatment will alleviate it, the current threshold to access superannuation early may be
lower than compassion would warrant in some cases (the genuine hardship principle). That will be
particularly so if, for example, the relief provided by the treatment is modest and short-term.
QUESTION
1.11 Should SIS Regulation 6.19A(3)(a)(ii) and (iii) be amended to refer to ‘treatment’ rather than
‘alleviation’ of acute or chronic pain? Alternatively, should those provisions be removed entirely
(so that early access is only available where the individual’s condition is life-threatening)? What
would be the consequences of this approach?
Medical practitioners
Individuals can apply for early release of superannuation benefits independently or with the
assistance of third party commercial providers, who assist the individual with their application and
may also facilitate a relationship between the individual and a relevant medical professional. This
medical professional may not have had a prior relationship with the individual.
The current regulations do not specify whether the medical specialist referred to in SIS Regulation
6.19A(3) must be a specialist in the field of medicine to which the individual’s condition relates.
Furthermore, the regulations do not specify whether the Regulator is entitled to appoint, or rely
upon the advice of, particular medical professionals. In practice, this means that the Regulator will
generally be restricted to relying upon the evidence presented to them by the medical practitioner
(or an associate) who would be carrying out the treatment.
Given the need to ensure that the rules are fair and effective, and applied consistently, the current
arrangements may raise concerns that they lack sufficient objectivity.
Part 1: Early release on compassionate grounds
9
QUESTIONS
1.12 Should the reference to a medical specialist in SIS Regulation 6.19A(3) be clarified to ensure that
the practitioner is a specialist in the field most relevant to the condition being treated?
1.13 Should the Regulator be entitled to seek a second opinion from an approved medical practitioner/s,
or should the individual be required to obtain a reference from a list of approved medical
practitioners, to ensure the objectiveness of the assessment?
Funeral expenses grounds
SIS Regulation 6.19A(1) allows early release of superannuation benefits on the ground that release is
required to pay for expenses associated with a dependant’s palliative care, death, funeral or burial.
The term ‘dependant’ is defined in the Superannuation Industry (Supervision) Act 1993 (and
equivalently in the Retirement Savings Account Act 1997). Dependant, in relation to a person,
includes the spouse of the person, any child of the person and any person with whom the person an
‘interdependency relationship’.
Key issues
The current rules only apply where the deceased or the individual in palliative care has/had a
dependency relationship with the individual. This means that a person would not necessarily be able
to access their superannuation for the purposes of attending the funeral of a family member in
another jurisdiction, or for the purposes of contributing towards the costs of the funeral for a
non-dependant (for example, a sibling or parent). This may be seen to be meeting the ‘fair and
effective’ principle insofar as it provides an objective test. On the other hand, it could undermine the
principle on the basis that similar family cases are not treated alike.
The current test does not impose any requirement that the funeral expense in question be
reasonable, nor does it impose any other form of threshold or cap. This may be contrary to the
genuine hardship principle if early release is available to meet the costs of a particularly lavish
funeral, for example.
QUESTIONS
1.14 Should early access to superannuation benefits to meet expenses associated with palliative care,
death, funeral or burial be limited to where there is a dependency relationship? Why/why not? Could
there be any unintended consequences from expanding this provision?
1.15 Should there be a maximum amount that can be released to meet a funeral expense? (For example,
the amount that the Regulator considers reasonable).
Housing grounds
Superannuation benefits may be released early on the grounds that release is required to enable the
individual to make a payment on a loan, to prevent foreclosure of a mortgage on their home or
exercise of the mortgagee’s power of sale (SIS Regulation 6.19A(1)(b)).
Early release of superannuation benefits
10
The Regulator cannot approve an application on these grounds unless the individual provides a
written statement from the mortgagee, stating that a payment is overdue and that non-payment will
result in foreclosure or mortgagee sale SIS Regulation 6.19A(5)).
The maximum amount that can be released within a 12 month period is equal to three months’
repayments and 12 months’ interest on the outstanding balance of the loan (SIS Regulation
6.19A(6)).
Key issues
Some concerns have been raised about how the current provisions apply to homeowners. For
example, a few stakeholders have raised concerns that an individual’s superannuation cannot be
accessed if that individual’s name is not on the mortgage title, even though the home is the
individual’s principal place of residence.
A greater volume of correspondence has been received from stakeholders noting that the current
rules make no provision for Australians who face being evicted from a rental property. This means
people who are renting their home and cannot meet their rental payments are treated differently
from those who own their own home and cannot meet mortgage repayments.
There is a trade-off in releasing superannuation benefits for current-day consumption rather than
preserving it for retirement income purposes. One argument for allowing early release to prevent
mortgage foreclosure is that the principal place of residence represents a long-term financial asset
that is likely to contribute towards the adequacy of a person’s retirement wealth.
This argument does not apply to rental payments. The genuine hardship and fair and effective
principles draw attention to the fact that the immediate consequences for the loss of one’s home
may be the same, as discussed further above.
QUESTIONS
1.16 Should early release of superannuation benefits be available to meet mortgage payments
regardless of whether a person’s name is on the mortgage title for their principal place of residence?
What might be the implications of broadening the provisions in this way and what additional
limitations might be required? For example, should release be limited to dependants or spouses or
partners?
1.17 Is there a fundamental difference between meeting mortgage payments and meeting rental
payments which would warrant a difference in treatment (for example, in respect of the asset
available to mortgagees once all repayments have been made)? Or should early release on
compassionate grounds be extended to include individuals who are unable to meet rental
payments? If so, what evidence should be required and what should be the threshold for release
(for example, in rental arrears or rental eviction notice)?
Severe disability grounds
The current provisions allow for early access of superannuation benefits to modify a person’s
principal place of residence, or vehicle, to accommodate the special needs of the person or the
person’s dependant, arising from severe disability (SIS Regulation 6.19A(1)(c)).
Part 1: Early release on compassionate grounds
11
Key issues
The current rules make no specific provision for disability aids, such as a mobility scooter, although
there may be cases in which the Regulator may approve the release of funds for disability aids under
the residual discretion in SIS Regulation 6.19A(1)(f) (see below). The current rules may reflect the fact
that a residence or vehicle is an asset that is likely to be held by the member over the long term, so
that the modification should provide a long-term benefit (which may help to offset any detriment to
the member’s retirement income).
To ensure that early access to superannuation is only available once the welfare system has proved
insufficient, one stakeholder has suggested that superannuation benefits should be available for
expenses associated with severe disability only where other Government sources (for example, the
National Disability Insurance Scheme) do not cover costs fully, in doing so, aligning with the ‘last
resort’ principle.
QUESTIONS
1.18 Are the current disability grounds fit for purpose, or should early release be extended, for example,
to disability aids? If the latter, which expenses should be included, what evidence should be
required, and should there be a cap on funds released?
1.19 Should individuals seeking early release of superannuation under disability grounds be required to
demonstrate that they have sought assistance from other Government or non-Government
programs prior to being approved? If so, how should this requirement be administered?
Regulator’s residual discretion
In addition to the specific grounds of release listed in the regulations, the Regulator is also
empowered to release benefits in cases that it determines are ‘consistent with’ those grounds
(SIS Regulation 6.19A(1)(f)).
This rule is consistent with the fair and effective principle, because it allows the Regulator to treat
similar cases alike (where a case does not fall strictly within the ambit of the specific rules); for
example, by allowing release for certain dental expenses.
On the other hand, the existence of discretion of any sort risks undermining the deliberate strictness
and objectivity of the overall rules (undermining the fair and effective principle), unless carefully and
narrowly applied, as well as increasing the costs of administering the early release of benefits.
QUESTION
1.20 Should the Regulator’s residual discretion in SIS Regulation 6.19A(1)(f) be removed? What would
be the consequence of doing so?
Early release of superannuation benefits
12
Other potential new grounds, not currently in the legislation
As part of this review, the Government is consulting on whether the current grounds for early release
of superannuation benefits should be expanded to include new grounds. Several possible new
grounds have been discussed above (for example, dental expenses, medical aids and rental
expenses). Any expansion of the grounds should be considered in the context of the guiding
principles.
Victims of domestic violence
Another potential new ground for early release which has been raised by several stakeholders is for
victims of domestic violence, where an individual is experiencing a situation of family violence or
financial abuse by a domestic partner.
Early access to superannuation benefits may reduce financial security in retirement and exacerbate
the savings gap between men and women. The Government recognises the difficulties facing victims
of domestic violence and provides support through timely and targeted assistance, including through
the welfare system.
There is a trade-off between the principles of ‘genuine hardship’ whereby superannuation may help
meet short-term financial needs, and ‘preservation’ of income for retirement. It is an open question
whether early release for victims of domestic violence should be considered as a ‘last resort’ where
other forms of assistance have been inadequate.
Further, in considering this issue, it is worth noting that the Australian Law Reform Commission
(ALRC) did not consider it appropriate to include family violence as a purpose for which an individual
may apply for early access on compassionate grounds, or to create a new ground of early release on
the basis of family violence (Australian Law Reform Commission, Family Violence and Commonwealth
Laws – Improving Legal Frameworks (ALRC Report 117)). In making this recommendation, the ALRC
noted that many stakeholders had emphasised the importance of preserving superannuation
benefits until retirement.
This issue may also apply to the victims of crime discussion, in Part 3 of this paper.
QUESTIONS
1.21 Are there situations outside of the current compassionate grounds which may justify inclusion in the
early release of superannuation provisions, balanced against the need to preserve superannuation
benefits to provide income in retirement?
1.22 Should access to superannuation benefits be available to assist victims of domestic violence? Why /
why not? If yes, under what particular grounds (for example, financial hardship, homelessness,
victims of crime), which expenses should be included, and what evidence should be required?
13
PART 2: EARLY RELEASE ON THE GROUNDS OF SEVERE FINANCIAL HARDSHIP
The current arrangements for early release of superannuation benefits for severe financial hardship
were introduced in 1997 in place of the broad discretion previously held by the Insurance and
Superannuation Commissioner to determine whether a person was in severe financial hardship.
Before this time, assessments of financial hardship tended to be ad hoc, and different funds had
different rules. Members in similar circumstances often received different treatment. This test gives
consistency to applications for early access to superannuation on financial hardship grounds
although, unlike early release of superannuation on compassionate grounds, the ultimate discretion
to release funds lies with the trustee of the superannuation fund.
To access superannuation on the grounds of severe financial hardship, individuals who have not
reached preservation age must be able to show they are currently and have been in receipt of a
qualifying Commonwealth income support payment for a continuous 26-week period and satisfy the
trustee of their fund that they are unable to meet reasonable and immediate family living expenses.
The maximum amount that can be released in a 12-month period is no less than $1,000 (unless
preserved benefits are less than that amount) and no more than $10,000.
Those who have reached preservation age can access superannuation on severe financial hardship
grounds if they have received a qualifying Commonwealth income support payment for 39 weeks
after reaching preservation age and were not gainfully employed on the application date. There is no
limit on the amount of superannuation that can be released in these circumstances.
The test for ‘severe financial hardship’ is contained in SIS Regulation 6.01(5). This rule is deliberately
strict and objective. It ensures that early access to superannuation is available only as a last resort if
the income support system – which is the preferred way of delivering financial support to Australians
in need – has proved insufficient.
Qualifying payments are generally designed to provide financial support to people experiencing
financial hardship because of an unexpected life event such as disability or loss of employment.
ABSTUDY and some types of income support payments such as Austudy and Youth Allowance, are
not considered to be qualifying payments. Recipients of ABSTUDY, Austudy and full-time students on
Youth Allowance make a voluntary decision to pursue a course of study having regard to both the
immediate and future financial consequences of doing so.
In determining whether to release superannuation on the basis of serious financial hardship, the
trustee of a member’s superannuation fund must be satisfied that the individual meets the objective
test (regarding qualifying Commonwealth income support payments) and that ‘the person is unable
to meet reasonable and immediate family living expenses’. The regulations do not prescribe the
matters that the trustee is required to take into account in determining the latter.
Early release of superannuation benefits
14
Data on benefits released on the severe financial hardship grounds According to data from the Australian Prudential Regulation Authority (APRA), in 2015-16 around
$550 million in superannuation benefits from entities with more than four members was released on
financial hardship grounds. This represents around 2 per cent of all benefits released by entities with
more than four members in the 2015-16 financial year. This ratio has been consistent over the past
three years (since 2013-14, when data became available).
If the more common conditions of release (retirement, attaining age 65, attaining preservation age
and death) are excluded from the calculation, release of superannuation benefits on financial
hardship grounds comprised around 5 per cent of benefits released by entities with more than
four members (Chart 5), compared to around 2 per cent of benefits released on compassionate
grounds. These percentages have also been broadly consistent over the past three years.
Chart 5: Proportion of benefits released by condition of release
(ex. retirement, attaining age 65, attaining preservation age and death),
entities with more than four members, June 2016
Note: The large ‘Other’ category includes release of funds from one superannuation entity to another, where the specific condition of release was not specified (‘unrestricted non-preserved benefits’), as well as insurance benefits released to individuals through their superannuation account. Source: APRA Annual Superannuation Bulletin, June 2016.
Permanent incapacity
Severe financial hardship
Unclaimed money and lost member(incl. lost member who is found)
Termination (including with <$200)
Terminal medical condition
Compassionate grounds
Other
Part 2: Early release on the grounds of severe financial hardship
15
Discussion against the principles In general, the objective test for severe financial hardship – introduced in 1997 – appears to work
well in ensuring a consistent and effective way to assess whether individuals qualify for early release
on severe financial hardship grounds. The test is targeting release of benefits to those members of
the community who are considered to be in genuine hardship based on broader social policy
parameters. In doing so, the test may also be considered to meet:
• the fairness principle – by limiting eligible Commonwealth income support payments to those
which provide financial support to people experiencing financial hardship because of an
unexpected life event (for example, loss of employment or disability). In contrast, recipients of
ABSTUDY, Austudy and Youth Allowance make a voluntary decision to study.
• the last resort principle – as the social security system needs to be accessed first.
However, some stakeholders have raised concerns that the current criteria for financial hardship are
too strict. As such, they may argue the ground is inconsistent with:
• the genuine hardship principle – early release is not available to individuals where they ‘break’
the 26 weeks of continuous eligible Commonwealth income support payments rule. For
example, an individual may have had to forgo one week of Centrelink payments because they
worked intermittently; and
• the fair and effective principle:
– early release is not available to individuals in receipt of ABSTUDY, Austudy or Youth
Allowance;
– Australian residents overseas and some foreign workers cannot access their
superannuation on financial hardship grounds because they are not eligible for
Commonwealth income support; and
– a lack of definition or objective test for ‘unable to meet reasonable and immediate family
living expenses’ means trustees of superannuation funds may permit early release of
superannuation on financial hardship grounds inconsistently.
QUESTIONS
2.1 Having regard to the necessary trade-off between simplicity, objectivity and flexibility, should the
criteria for severe financial hardship be amended? If so, how? In particular, is there merit in
expanding or contracting the 26-week rule and/or the definition of qualifying Commonwealth income
support payments?
2.2 Should there be a prescribed standard of proof of being ‘unable to meet reasonable and immediate
family living expenses’? How can the legislation guard against non-genuine claims?
17
PART 3: VICTIMS OF CRIME COMPENSATION
Introduction Victims of crime cannot generally access the superannuation of a perpetrator where they are owed a
payment as a result of a court proceeding. This consultation paper asks whether, and in what
circumstances, victims of crime might be able to recover unpaid compensation or restitution from a
perpetrator’s superannuation.
Currently, there are three ways that a victim of crime can seek compensation from the perpetrator:
• State and Territory statutory compensation regimes, where the state pays compensation to a
victim of crime.
• Compensation or restitution orders requiring the perpetrator to pay the victim, handed down as
part of the sentencing process in a criminal trial.
• A victim pursuing civil action against a perpetrator or alleged perpetrator for damages (either
following their conviction or in the absence of a conviction).
The perpetrator’s superannuation is protected in each of these processes. This is because
superannuation trustees are unable to pay preserved benefits except in specified situations
(including paying out the proceeds of crime) under Division 6.3 of the Superannuation Industry
(Supervision) Regulations 1994.
While a victim can seek to recover compensation or restitution debts owed by the perpetrator from
the perpetrator’s non-superannuation assets, he or she cannot generally access the perpetrator’s
superannuation.
Where the perpetrator has little or no assets outside of superannuation, a victim may be unable to
pursue compensation or may be left with unpaid debts in the event they are able to secure a
compensation order or civil judgment.
The special protection afforded to superannuation balances reflects a longstanding view that
preserving a person’s private retirement income is important.
Providing access to a perpetrator’s superannuation account balance for victims of crime would
represent a departure from the existing retirement income framework. However, a victim may
already access other assets that may be used in future by an individual to support their retirement,
including a person’s home and non-superannuation financial assets (including interests in
non-superannuation managed investment schemes and other fixed trusts).
Early release of superannuation benefits
18
How do victims get compensation now?
State and Territory statutory compensation schemes
Each State and Territory has its own statutory victims of crime compensation scheme. Under most
schemes, a victim who was been injured by an act of violence and wants to seek compensation can
apply to a government body (or tribunal). The body will assess the victim’s claim and if the
assessment is in favour of the victim’s claim, it will pay the victim with state funds. There is no
general victims–of-crime compensation scheme at the Commonwealth level, although there are
schemes that can be accessed in particular circumstances (such as the Australian Victims of Terrorism
Overseas Payments).
The definition of victim is broad in most jurisdictions, encompassing: the primary victim (the person
who has been injured); related victims, such as parents or financial dependents; witnesses who have
been injured by hearing or seeing an act of violence; and those who incur funeral expenses in cases
of homicide. Notably, under these frameworks a criminal conviction is generally not necessary for
compensation to be available to a victim – and in some cases can even be available where an alleged
perpetrator was found not guilty.
The amount of compensation available varies between States and Territories, with some schemes
capping assistance to a related victim at $10,000, compared to others that cap assistance at
$150,000 (for multiple offences committed by the same offender).
Generally, compensation from statutory schemes is not provided if funds are obtained by the victim
from other sources like Medicare, third party compensation, workers’ compensation or motor
vehicle compensation schemes.
Appendix B compares the state and territory statutory compensation schemes.
These schemes remove the need for a victim of crime to seek compensation from the perpetrator.
The victim receives compensation directly from the scheme, so access to superannuation is largely
irrelevant to them. However, if the perpetrator is convicted of the alleged crime the state may
subsequently take action against the perpetrator to recover the amount.
Court ordered compensation during criminal trial
The courts in most States and Territories, except Western Australia, have the power to order an
offender to pay compensation or restitution for loss, injury or damage as a sentencing option in a
criminal trial. In Western Australia, the power to order compensation or reparation is restricted to
loss or damage to property.
A court order of this type is a judgement debt against the offender. If the offender does not pay, the
victim is able to enforce the debt through the court system, including petitioning for bankruptcy. In
these circumstances, the victim (and any other creditors) will be able to access most of the
perpetrator’s assets, but not amounts kept in the perpetrator’s superannuation account.
Civil court action
Victims of crime can also seek damages from the perpetrator through the civil courts, in addition to
statutory victims of crime regimes.
Part 3: Victims of crime compensation
19
If a civil court hands down an order to pay the victim damages, a judgement debt arises against the
perpetrator and the mechanism for enforcing payment is the same as the criminal compensation
orders outlined above. The victim is able to petition for bankruptcy of the perpetrator if the amount
is unpaid, and able to access the perpetrator’s assets (outside of superannuation) as a creditor to the
bankrupt estate.
Notably, civil actions may have no connection to a criminal trial or conviction. The application is
decided on the balance of probabilities (rather than the criminal standard of proof which is beyond
reasonable doubt) and the amounts payable are uncapped.
Bankruptcy Generally, superannuation account balances are protected from creditors in the event of a
bankruptcy. Exceptions include when contributions have been made by individuals into their own
superannuation account or a third party’s superannuation account (for example, the bankrupt’s
spouse’s or child’s account) in order to defeat creditors.
When looking at whether a contribution was made to defeat creditors, the law has regard to
whether the person had previously established a pattern of making contributions and if the
contribution, when considered in light of that pattern, is out of character.
Superannuation lump sums that are withdrawn on or after the date of bankruptcy are generally also
protected from creditors.
If the after-tax income of a person who is subject to bankruptcy is over a certain threshold, the
person may have to make compulsory payments to their bankruptcy trustee to fulfil their debts.
Income that is counted towards this threshold includes any income stream payments from
superannuation, as well as amounts that are salary sacrificed into superannuation.
Most compensation orders are provable in bankruptcy, meaning that a scheme or individual victim of
crime can lodge a claim to be paid and may be able to recover part or all of the compensation.
In most States and Territories (except Queensland), debts arising out of compensation/restitution
orders are extinguished upon discharge from bankruptcy. This means an offender who is ordered to
pay compensation but has no assets outside of superannuation may declare bankruptcy and have
these debts extinguished.
Issues
Issue 1 – Should victims of crime have access to a perpetrator’s superannuation?
The first issue is whether the objective of preserving an individual’s superannuation balance for
retirement should continue to prevail over the rights of victims of crime in most circumstances.
QUESTION
3.1 Should victims of crime be able to access a perpetrator’s superannuation for compensation?
Early release of superannuation benefits
20
Issue 2 – Should there be a requirement for a criminal conviction?
As previously noted, victims of crime may obtain compensation or restitution orders against
perpetrators as part of the sentencing process in a criminal trial or in subsequent civil proceedings
relating to a conviction. However, they can also access compensation through state statutory
compensation schemes or civil proceedings in the absence of a conviction. This raises the issue of
whether superannuation should only be available to meet unpaid compensation claims relating to
crimes for which a conviction is recorded or whether it should be available in the absence of a
conviction – which is a much lower threshold.
QUESTION
3.2 Should access to superannuation be limited to cases where a criminal conviction has been made?
Issue 3 – Should it only be available for particular offences?
The type and degree of severity of crimes varies drastically. This raises the issue of whether access to
superannuation should be confined to particular crimes.
Types of crime include violent crime, property crime and financial crime. Within each category there
is a wide range of severity. While violent and sexual crimes can have significant impact on the victim
and their relatives, others such as minor theft may have relatively little impact in some cases.
QUESTION
3.3 Should access to a perpetrator’s superannuation be available for compensation or restitution arising
from all crimes, just violent crimes, or another threshold (such as the maximum penalty for offence)?
Issue 4 – Should access to superannuation only be available if there are out-of-character contributions?
Under one possible approach, superannuation could be available to pay outstanding victims
compensation orders from a criminal case if it can be established that the perpetrator made out of
character contributions to superannuation to shelter assets.
This would directly address the issue of superannuation being used as a method to avoid paying
compensation to victims.
QUESTION
3.4 Should access to a perpetrator’s superannuation only be available if the perpetrator made irregular
or out of character contributions to superannuation to shelter assets?
Part 3: Victims of crime compensation
21
Issue 5 – How might a victim’s right to a perpetrator’s superannuation be enforced?
A potential option could be to allow perpetrators to access their superannuation voluntarily pay
outstanding compensation orders, if they wish to preserve other assets, or do not have other assets
outside of superannuation.
However, in cases where perpetrators are unwilling to access their superannuation to pay
outstanding compensation orders there are a range of issues related to enforcing the victim’s right to
the superannuation.
Generally, a victim will not have visibility over the perpetrator’s superannuation assets. There is no
established mechanism for disclosing superannuation assets and petitioning for access to those
funds, outside of existing bankruptcy proceedings.
QUESTION
3.5 How would a victim’s right to a perpetrator’s superannuation be enforced? How would the victim
gain visibility over the perpetrator’s superannuation assets?
Issue 6 – Should there be limits on the amount of superannuation that can be accessed?
For perpetrators close to retirement age, taking their superannuation may mean they have limited
capacity to support their retirement leading to reliance on the Age Pension.
To address this issue, the amount of superannuation available to fulfill a compensation order could
be capped at a dollar figure.
Some perpetrators may have low superannuation balances, below the dollar figure cap that is
imposed. This may mean in some cases that a perpetrator has no superannuation left after the
superannuation is seized to pay a debt.
Alternatively, a percentage cap could be used. This would be a certain proportion of the
perpetrator’s superannuation balance, meaning that even those with low balances would not be left
with zero superannuation after paying the outstanding debt.
Additional consideration should be given for more complex scenarios. As an example, in
circumstances where an offender has a spouse or dependent children, there may need to be
safeguards in place to ensure financially dependent third parties (such as children) will not be unduly
affected.
Further, in instances where a couple has jointly contributed to only the offender’s account, claims by
the victim of crime may need to be treated differently.
Matters arising from family law proceedings where the splitting of superannuation is sought as a
result of a relationship breakdown are discussed below at issue 10 – Family Law.
Early release of superannuation benefits
22
QUESTION
3.6 How much of a perpetrator’s superannuation should be available? Should the amount be different
based on the perpetrator’s circumstances (for example, low balances, dependent children)?
Issue 7 – If access were permitted, should it only be for lump sums?
There are different types of superannuation interests. Where an individual is in accumulation phase
of a ‘defined contribution’ product, there is an account balance associated with that product – so
access to lump sums should be relatively straightforward.
However, some individuals also hold ‘defined benefit’ interests or annuity products that do not have
an account balance and cannot be commuted. Access to superannuation in these cases, especially
when the individual has not retired and a pension is not being paid, would be more complicated.
When an individual retires and starts an income stream, either account based or defined benefit,
there are two possible options: a portion of the income payments go towards paying a compensation
debt over time; or the individual could be required to take out a lump sum (if possible) to pay the
compensation all at once.
However, a requirement to make ongoing payments from a superannuation pension to a victim of
crime may be inconsistent with the notion that bankrupts should be given a fresh start at the end of
the bankruptcy period.
QUESTION
3.7 Should access to a perpetrator’s superannuation be in the form of a lump sum, portions of income
stream payments or both?
How should defined benefit products and annuities that have not yet commenced payments be
treated?
3.8 Should contributions into superannuation after a compensation order has been made count towards
the amount that can be accessed?
Issue 8 – If access to superannuation was permitted, would it apply to existing compensation orders?
Most changes to law are prospective – that is, they only apply from the date the law changes.
However, in exceptional circumstances they can apply to past conduct. Retrospective changes to the
law which alter rights and obligations can raise issues of fairness.
The question that arises here is whether victims of crimes committed in the past should be eligible
for access to superannuation (if such a change was made).
Part 3: Victims of crime compensation
23
QUESTION
3.9 Where a criminal conviction has been made, should victims be able to access a perpetrator’s
superannuation to pay either outstanding compensation or restitution orders?
Issue 9 – Should State/Territory compensation schemes be able to recover their costs from the perpetrator’s superannuation?
Victims of crime may seek compensation from State and Territory statutory schemes. Where a
statutory scheme makes a payment to a victim, it may be able to seek to recover its costs, or a
portion of its costs, from the perpetrator if there is a conviction. As part of this process, it may
consider the perpetrator’s capacity to pay and the impact on their dependants.
This raises the issue of whether statutory schemes should be able to access superannuation to
recover their costs and whether they should take this into account in determining the proportion of
costs to be recovered from the perpetrator.
QUESTION
3.10 Should State and Territory compensation schemes be able to recover the cost of their payments to
victims from the perpetrator’s superannuation?
Issue 10 – Overlap with Family Law
Access to superannuation is possible through family law provisions that override the individual
nature of a superannuation asset in particular circumstances – the breakdown of a marriage or de
facto relationship.
The Family Law Act 1975 provides an extensive and flexible regime for apportioning property rights
justly in the event of a relationship breakdown (including injunctive relief pending decisions of the
court as well as superannuation splitting orders).
There are two ways that superannuation is split under family law – payment splitting and interest
splitting.
Payment splitting means that, as and when a payment from a superannuation interest becomes
payable to the member spouse (usually because a condition of release has been met, such as
retirement), a certain amount will be paid to the non-member spouse and the remainder will be paid
to the member spouse.
Payment splitting does not create a separate new superannuation interest for the non-member
spouse.
Interest splitting involves the creation of a new interest for the non-member spouse. The law may
also permit a transfer or roll-over of benefits for the non-member spouse to another fund. This lets
the non-member spouse access entitlements independently of the member spouse.
Early release of superannuation benefits
24
Some superannuation interests are 'unsplittable interests'.
Most superannuation can be split either by agreement or court order. It is not possible to split
superannuation of little or no value when it would not be cost effective to do so. Superannuation
interests with a withdrawal benefit of less than $5,000 and those paying a non-commutable pension
or an annuity of less than $2,000 per annum, are prescribed as unsplittable interests.
In circumstances where there has been a relationship breakdown, a perpetrator of crime’s
superannuation balance may be subject to competing claims from their partner and a victim of
crime. It would be necessary to determine how these competing claims should be addressed and
prioritised.
QUESTION
3.11 In circumstances where there are concurrent family law and victim of crime compensation
proceedings, how should these matters be addressed and prioritised?
What other issues might arise?
25
APPENDIX A: CONSOLIDATED LIST OF QUESTIONS
Principles underpinning early release Question 0.1 Do these proposed principles provide an appropriate guide to determine the grounds
for early release under compassionate and financial hardship grounds, and for
victims of crime compensation? If not, what should these principles be?
Question 0.2 Having regard to these principles, should early release of superannuation benefits
generally be more or less difficult to obtain?
Part 1: Compassionate grounds Question 1.1 Should the assessment of financial capacity be made more prescriptive and/or
objective? If so, how? What information might applicants need to provide?
Question 1.2 What factors might be driving the increase in the amount of superannuation released
on medical grounds and are these factors any cause for concern?
Question 1.3 Do the current provisions for early release on medical grounds strike the appropriate
balance between preserving income for retirement and providing assistance in times
of genuine hardship? If no, what are the alternatives?
Question 1.4 Should there be a limit on the number of releases permitted within a certain
timeframe (for example, 12 months) and/or should there be cashing restrictions on
the amount released? If so, should there be different restrictions for different
medical conditions?
Question 1.5 Have you observed any trends in the types of treatments that are being funded by
superannuation benefits and are these trends any cause for concern?
Question 1.6 Are there certain treatments for which early release of superannuation should not be
permitted? If so, what is the basis upon which these treatments should be excluded?
Question 1.7 When might ART (IVF) be necessary to treat a life threatening illness or alleviate
acute or chronic pain or mental disturbance (in general – noting that this will depend
upon the specific circumstances of each case)?
Question 1.8 When might bariatric surgery be genuinely necessary to treat a life threatening
illness or alleviate acute or chronic pain or mental disturbance (in general – noting
that this will depend upon the specific circumstances of each case)?
Question 1.9 Should the rules explicitly require that the Regulator be satisfied that the amount
claimed for a particular treatment is reasonable? If so, what evidence might be
relevant to that determination?
Early release of superannuation benefits
26
Question 1.10 Should there be an additional category of early release in respect of dental
treatment? If so, under what circumstances should early release be available and
should there be any limits or restrictions?
Question 1.11 Should SIS Regulation 6.19A(a)(ii) and (iii) be amended to refer to ‘treatment’ rather
than ‘alleviation’ of acute or chronic pain? Alternatively, should those provisions be
removed entirely (so that early access is only available where the individual’s
condition is life-threatening)? What would be the consequences of this approach?
Question 1.12 Should the reference to a medical specialist in SIS Regulation 6.19A(3) be clarified to
ensure that the practitioner is a specialist in the field most relevant to the proposed
condition being treated?
Question 1.13 Should the Regulator be entitled to seek a second opinion from an approved medical
practitioner/s, or should the individual be required to receive a reference from a list
of approved medical practitioners, to ensure the objectiveness of the assessment?
Question 1.14 Should early access to superannuation benefits to meet expenses associated with
palliative care, death, funeral or burial be limited to where there is a dependency
relationship? Why/why not? Could there be any unintended consequences from
expanding this provision?
Question 1.15 Should there be a maximum amount that can be released to meet a funeral expense?
(For example, the amount that the Regulator considers reasonable.)
Question 1.16 Should early release of superannuation benefits be available to meet mortgage
payments regardless of whether a person’s name is on the mortgage title for their
principal place of residence? What might be the implications of broadening the
provisions in this way and what additional limitations might be required? For
example, should release be limited to dependants or spouses or partners?
Question 1.17 Is there a fundamental difference between meeting mortgage payments and meeting
rental payments which would warrant a difference in treatment (for example, in
respect of the asset available to mortgagees once all repayments have been made)?
Or should early release on compassionate grounds be extended to include individuals
who are unable to meet rental payments? If so, what evidence should be required
and what should be the threshold for release (for example, in rental arrears or rental
eviction notice)?
Question 1.18 Are the current disability grounds fit for purpose, or should early release be extended
to disability aids? If the latter, which expenses should be included, what evidence
should be required, and should there be a cap on funds released?
Question 1.19 Should individuals for early release of superannuation under disability grounds be
required to demonstrate that they have sought assistance from other Government or
non-Government programs prior to being approved? If so, how would this
requirement be administered?
Question 1.20 Should the Regulator’s residual discretion in SIS Regulation 6.19A(1)(f) be removed?
What would be the consequence of doing so?
Appendix A: Consolidated list of questions
27
Question 1.21 Are there situations outside of the current compassionate grounds which may justify
inclusion in the early release of superannuation provisions, balanced against the
need to preserve superannuation benefits to provide income in retirement?
Question 1.22 Should access to superannuation benefits be available to assist victims of domestic
violence? Why / why not? If yes, under what particular grounds (for example,
financial hardship, homelessness, victims of crime), which expenses should be
included, and what evidence should be required?
Part 2: Severe financial hardship ground Question 2.1 Having regard to the necessary trade-off between simplicity, objectivity and
flexibility, should the criteria for severe financial hardship be amended? If so, how? In
particular, is there merit in expanding or contracting the 26-week rule and/or the
definition of qualifying Commonwealth income support payments?
Question 2.2 Should there be a prescribed standard of proof of being ‘unable to meet reasonable
and immediate family living expenses’? How can the legislation guard against
non-genuine claims?
Part 3: Victims of crime compensation Question 3.1 Should victims of crime be able to access a perpetrator’s superannuation for
compensation?
Question 3.2 Should access to superannuation be limited to cases where a criminal conviction has
been made?
Question 3.3 Should access to a perpetrator’s superannuation be available for compensation or
restitution arising from all crimes, just violent crimes, or another threshold (such as
the maximum penalty for offence)?
Question 3.4 Should access to a perpetrator’s superannuation only be available if the perpetrator
made irregular or out of character contributions to superannuation to shelter assets?
Question 3.5 How would a victim’s right to a perpetrator’s superannuation be enforced? How
would the victim gain visibility over the perpetrator’s superannuation assets?
Question 3.6 How much of a perpetrator’s superannuation should be available? Should the
amount be different based on the perpetrator’s circumstances (for example, low
balances, dependent children)?
Question 3.7 Should access to a perpetrator’s superannuation be in the form of a lump sum,
portions of income stream payments or both? How should defined benefit products
and annuities that have not yet commenced payments be treated?
Question 3.8 Should contributions into superannuation after a compensation order has been made
count towards the amount that can be accessed?
Early release of superannuation benefits
28
Question 3.9 Where a criminal conviction has been made, should victims be able to access a
perpetrator’s superannuation to pay either outstanding compensation or restitution
orders?
Question 3.10 Should State and Territory compensation schemes be able to recover their payments
to victims from the perpetrator’s superannuation?
Question 3.11 In circumstances where there are concurrent family law and victim of crime
compensation proceedings, how should these matters be addressed and prioritised?
What other issues might arise?
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APPENDIX B: STATE AND TERRITORY STATE-FUNDED COMPENSATION REGIMES
LEGISLATION AND SCHEME COVERED VICTIMS TIME LIMITS CAP ON ASSISTANCE
NSW – Victims Rights and Support Act 2013
NSW – Victims Rights and Support
Regulations 2013
Scheme name: Victims Support Scheme
• Primary, secondary and family victims
• Guardian for child who is a primary victim
• Non-family members who incur funeral
and other expenses
Application must be made
within two years of event.
• $35,000 for primary victims
• $30,000 for guardians
• $18,000 for family
• $13,000 for non-family members
• Recognition payments up to $15,000
VIC – Victims of Crime Assistance Act 1996
Scheme name: Victims of Crime Assistance
Tribunal (VOCAT)
• Primary, secondary or related victims
• Person who incurs funeral expenses
Application must be made
within two years of event.
• $60,000 for primary victims (plus special assistance up to
$10,000)
• $50,000 for secondary victims
• $50,000 for related victims (with a pool of $100,000
available for all related victims)
QLD – Victims of Crime Assistance Act 2009
Scheme name: Victim Assist Queensland
scheme
• Primary, parent secondary, witness
secondary and related victims
• Person who incurs funeral expenses
Application must be made
within 3 years of event.
• $60,000 for primary victims (plus special assistance up to
$10,000)
• $50,000 for secondary victims
• $50,000 for related victims (with a pool of $100,000
available for all related victims)
SA – Victims of Crime Act 2001
Scheme name: VOC compensation scheme
• Primary victims
• People directly related to victims
• Non-related people representing
dependants (if the victim died, no previous
order for compensation and the court
determines the person suitable to
represent)
• Person who incurs funeral expenses
Application must be made
within three years of the
act or 12 months if act
resulted in death of victim.
• Assistance is capped at $100,000 in total. Composed of an
amount based on how severe the non-financial loss is.
• Compensation for grief is capped at $20,000 and total
funeral expenses at $14,000.
Early release of superannuation benefits
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LEGISLATION AND SCHEME COVERED VICTIMS TIME LIMITS CAP ON ASSISTANCE
WA – Criminal Injuries Compensation Act
2003
Scheme name: Criminal Injuries
Compensation Scheme
• The victim of an offence where they
suffered injury
• A close relative of a person killed
Application must be made
within three years of the
violent act.
• Assistance is capped at $75,000 or, for certain situations,
$150,000.
NT – Victims of Crime Assistance Act
Scheme name: Victims Financial Assistance
Scheme
• Primary, secondary, family and related
victims
Application must be made
within two years of the
violent act.
• $40,000 for a primary victim
• $40,000 for secondary victims (if there is more than one
secondary victim this amount is shared)
• $40,000 for family victims (if there is more than one
family victim this amount is shared)
TAS – Victims of Crime Assistance Act 1976
Scheme name: Victims of Crime Assistance
• Primary, secondary and related victims
• Person who incurs funeral expenses
Application must be made
within three years of the
date of the offence.
• $30,000 for a primary victim
• $20,000 for a secondary victim
• $10,000 for a related victim (for multiple claims relating
to the same incident, the maximum total for related
victims is $50,000)
ACT – Victims of Crime (Financial Assistance)
Act 2016
ACT – Victims of Crime (Financial Assistance)
Regulation 2016
Scheme name: New Financial Assistance
Scheme
• Primary victims
• Class A related victims
• Class B related victims
• Class C related victims
• Homicide witnesses
• Person who incurs funeral expenses
Application must be made
within three years of the
date of the offence.
• $50,000 for a primary victim
• $30,000 for a Class A related victim
• $20,000 for a Class B related victim
• $10,000 for a Class C related victim
• $10,000 for a homicide witness
• $8,000 for funeral assistance
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APPENDIX C: TERMS OF REFERENCE OF THE REVIEW
Treasury will review whether the current rules governing the early release of superannuation
benefits on compassionate grounds and in cases of severe financial hardship (regulations 6.19A and
6.01 of the Superannuation Industry (Supervision) Regulations 1994, respectively) remain fit for
purpose.
In making recommendations, it will consider whether these rules appropriately balance the need to:
• preserve superannuation benefits to meet the objective of providing income in retirement to
substitute or supplement the Age Pension;
• ensure that superannuation is available for current consumption in certain, limited cases of
genuine hardship or where warranted for compassionate reasons; and
• ensure the rules can be administered fairly and effectively.
The review will also consider and make recommendations on whether a perpetrator’s
superannuation should be accessible to pay compensation or restitution to a victim of crime; and, if
so, the circumstances in which this may be appropriate.
The review will not examine other general conditions of release for superannuation.
Treasury will report to the Government in March 2018.